The direct method for the preparation of the statement of cash flows ________.
A)starts with net income and makes adjustments for all the items that are not cash.
B)starts by converting every number on the income statement to its cash amount.
C)starts by estimating the sources of cash and the uses of cash.
D)all of these

Question

Quizplus · Accepted Answer

The direct method involves converting each line item of the income statement to its cash equivalent, showing actual cash receipts and payments.

The Direct Method for the Preparation of the Statement of Cash